Canada’s $28.6-billion building products retailers have been on fire lately, due to low interest rates and a continued home renovation craze among cocooning boomers. Industry-wide annual revenue growth is projected to average 5% during the next three years.

According to the Canada Mortgage and Housing Corporation, the average homeowner in five major cities (Halifax, Montreal, Toronto, Calgary, Vancouver), who is planning renovations, will spend $10,243 in 2003, an increase of more than $1,000 over the previous year.

As part of their efforts to win consumer mind- and wallet-share, three of the major big box outlets – Rona, Home Depot and Réno-Dépôt – have launched substantial spring ad campaigns.

Fresh from a year of record revenues and profits, for instance, Quebec-based Rona is embarking on a major initiative to double market share over the next five years.

‘We want to establish a significant presence across the country,’ says Michael Brossard, the company’s marketing director. ‘We want to sign up new vendors, open new stores and make acquisitions if the opportunity arises.’

The strategy’s centre-point is a monster $60-million advertising budget for 2003, announced late last month, which includes print, radio, sponsorships, and for the first time, a cross-Canada TV campaign.

‘We want to establish a footprint that will place Rona in the minds of Canadian consumers,’ he says.

Although Rona is a household name in Quebec, the brand is only a rumour in the rest of the country. The company has an 88% top-of-mind awareness in its home province, but less than half of that in Ontario, and in Western Canada recognition is in the low 20s. However with the acquisition of Cashway in 2002 and Revy in 2001, coupled with the addition of the Revelstoke and Lansing banners, the company’s split identity was becoming an issue.

With the new campaign, Rona will consolidate its image under its house brand. The process began with new signage at the acquired stores, including posters assuring customers they could still rely on consistent personalized service.

‘We built our name on service,’ says Brossard. ‘And that’s not going to change.’

Rona is turning to humour to get its point across.

The three initial spots – produced by Montreal agency BCP – feature caricature-like actors facing typical household situations that call for minor repairs, such as a broken toilet, missing tile or a smelly rug that needs to go. ‘You are a handyman,’ challenges the announcer, exhorting the protagonist to handle the job himself.

Brossard wouldn’t say how much of the $60-million ad budget would be devoted to television, but added that Rona distributes about 200 million circulars a year, which chew up a big portion.

According to one analyst, upstart Rona, with its recent acquisitions, looks to be a dark horse to make significant gains.

‘Rona [has taken] on the role of industry consolidator with proven acquisition experience,’ wrote James Durran of National Bank Financial in a recent report. ‘[The company] appears to be the only major Canadian hardware retailer with the tools required to capitalize on the industry’s inevitable consolidation.’

In fact, Rona’s ad blitz couldn’t have come at a better time. The company has been in a toe-to-toe battle with arch-rival Réno-Dépôt for market share in Quebec. But that battle will now have nationwide implications. Just a few days after the Rona campaign was announced, Réno-Dépôt was put on the auction block by its British parent Kingfisher PLC.

Réno-Dépôt currently operates 20 big-box outlets in Quebec and Ontario including three in the greater Toronto area, and had plans on the books for an additional four or five. But those plans have been put on hold, at least temporarily.

The announcement left observers speculating which existing partner would make the best fit with Réno-Dépôt. At first glance Home Depot, the U.S. giant which dominates the Ontario market, would appear to be the ideal partner. The problem is that the two retailers have banners in close proximity to each other, making synergies doubtful.

But Réno-Dépôt’s concentration in Quebec doesn’t make it the ideal fit for Rona either. A better fit might be U.S.-based giant Lowe’s, one of the two players which – along with Home Depot – dominate the American building products industry.

But, according to one Réno-Dépôt spokesperson, the company isn’t standing around waiting for a deal to be announced.

‘Spring is the time that most Canadians begin to think about renovations,’ says Paul Hétu, the company’s VP of communications and advertising. ‘And we intend to be very present in the consumer’s mind.’

Réno-Dépôt’s new campaign, which also uses humour, builds on the huge size of the company’s big-box outlets and its emphasis on selection.

The hilarious television spots, which continue the theme of an older campaign, produced by Diesel Marketing of Montreal, show fake ads for non-existent products using the theme ‘If it existed, we would sell it.’

One spot is for a mythical double-bladed chainsaw that is so solid it can cut through an iron safe, yet is still sharp enough to slice a pork roast. The fictional saw doubles as an electric toilet plunger and can be used to spray paint walls. The campaign’s $4.5-million media placement will be handled by Media Buying Services.

However the industry shakes itself out, it’s almost certain that Home Depot, which dominates the Ontario market and has a massive U.S. support system to fall back on, is going to be one of the players left standing.

According to a company official, Home Depot is in the midst of a brand repositioning, which began earlier this year to coincide with the advent of the spring rush.

‘We are pursuing an aggressive strategy,’ said Pat Wilkinson, Home Depot’s director of marketing. ‘There is a lot of room for growth in Canada, particularly in urban areas where we are strong.’ The company already manages 89 big-box stores in Canada, and expects to open another 30 during the next two years.

Home Depot’s creative is done in the U.S. Its new brand-building effort centres on the slogan ‘You can do it, we can help.’

That leaves Canadian Tire and Home Hardware, neither of which fall into precise categories. Canadian Tire has a significant hardware and building products offering. But these form only part of its operations, and the company is not a direct challenger to any of the major players. Home Hardware, on the other hand has smaller stores, but its co-operative characteristics put it at a distinct disadvantage when competing on a national basis.

One subtext underlying industry competition is how long Canadian consumers are going to continue their love affair with the big-box outlets that Home Depot, Réno-Dépôt and – to some extent – Rona, have staked their futures on. Many have speculated that as the Canadian population ages, consumers are going to be less enthusiastic about the long walks through gigantic parking lots and endless aisles.

But one industry observer thinks that so far the concept hasn’t run out of steam.

‘[For more than 10 years,] people have been saying that boomers will be going to smaller stores,’ says Robert Gerlsbeck, editor of Hardware Merchandising magazine. ‘But it hasn’t happened yet.’